The colorful efforts of Donald Trump to buy Patricia Kluge's former home have pushed Bank of America so hard that the bank has apparently gotten fed up and filed suit against the New York-based powerbroker. The case revolves around Albemarle House– a storied mansion of over 23,000 square feet that Kluge once offered for sale for $100 million but ultimately lost earlier this year at a foreclosure auction.

Trump, who has snapped up the surrounding properties and peppered them with no-trespassing signs in a brazen effort to scare off competing bidders, has lambasted the bank's effort to sell the house to anyone but Trump himself.

Bank of America, which had lent Kluge nearly $23 million against Albemarle House, transferred the property to a subsidiary called Quality Properties, and the 98-acre estate is jointly listed by the Richmond office of CB Richard Ellis and Charlottesville-based estate broker Jim Bonner for $16 million.

The sticking point is that Trump owns Albemarle House's front yard, and he maintains that even if the bank finds a buyer, he retains the option of matching the price and buying the mansion, which now sits in the middle of what are called the Trump Vineyards, most of which The Donald acquired at an April auction for $6.21 million.

The current contretemps stems from Patricia Kluge's 1990 divorce from billionaire John Kluge. In the settlement, she received Albemarle House and the land upon which it was built, but the 200-acre front yard and former golf course were retained by her ex– and eventually went into a trust for their son, John W. Kluge Jr.

The elder John Kluge saddled Albemarle House with a right of first refusal– a provision requiring Patricia to submit any purchase offer on the house to the owner of the surrounding land within 15 business days.

Flash forward 21 years. Patricia Kluge has seen nearly everything she owns auctioned off in an unsuccessful attempt to hold on to her Kluge Estate Winery and Vineyard. She appeared in bankruptcy court in July and now works for her winery's new owner, Trump.

In late January, a trustee for John Kluge Jr. granted Trump the option to buy the house-hugging parcel and assigned the right of first refusal to Trump Virginia Acquisitions, according to court documents. A few days later, Trump lawyer Jason Greenblatt demanded that BofA advise all potential bidders of Trump's alleged right.

In early June, Trump son Eric followed up by asserting the right of first refusal to Quality Properties, which was trying to market the mansion after the bank claimed it at the forclosure auction.

In response, Quality Properties demanded that Trump Acquisitions release the right– or pony up the foreclosure value of $15.26 million and buy the house.

In the lawsuit, filed August 26 in federal court, Quality Properties argues that the right of first refusal has become unenforceable, as the original tract has been subdivided and now owned by three different entities: Quality Properties, Trump Acquisitions, and Trump Vineyards. In another legal theory, BofA also maintains that the right expired when Patricia Kluge encumbered Albemarle House with debt.

"I think the lawsuit is a little bit desperate," says Eric Trump, calling the Albemarle House loan one of the "all-time worst deals" for Bank of America.

"They shouldn't have let the front yard go; they shouldn't have lent money on a property with a right of first refusal," says Trump. "Bank of America received a huge amount of negative publicity. And the lawsuit means the property will be tied up in litigation for years, unfortunately."

"[F]or the reasons outlined in the Complaint, the bank believes that Trump does not have a right of first refusal on the property and the bank filed the litigation to validate this belief," says Bank of America spokesperson Shirley Norton in an email. "This suit is not impacting the marketing of the property, we continue to market the property and have seen good interest from prospective buyers." She notes that Trump's $3.6 million bid at the foreclosure auction was "well below the appraised value for the property."

"There's been some good activity and a couple of proposals on the property," says broker Jim Bonner, adding that he can't comment on the lawsuit because he doesn't know much about it.

"Probably any buyer would be spooked," says Bill Shmidheiser, a lawyer who handled the winery foreclosure for another lender but who is unconnected to the current controversy.

Shmidheiser says that with the disputed right of first refusal hanging over the property, he can imagine the bank saying, "We need to clear this up."

Because the right of first refusal specifically noted that the property can be encumbered, "I think Bank of America will prevail," says Shmidheiser.

20 comments

leonard cason September 2nd, 2011 | 12:27pm

this is so bad the bank of america should be sued for all of there wrong doings threw the years this bank should be sued to close its doors who cares if the house sells or not itys the banks fault that it has not sold the house not the donalds fault I am so tired of hearing of banks forclosing on people I would hope that the bank would be closed so they will stop stealing peoples money

Henry September 2nd, 2011 | 1:01pm

Banks would not need to foreclose if people paid their legal debts. Don't take out a loan if you cannot pay it back.

democracy September 2nd, 2011 | 1:26pm

Actually, Bank of America IS being sued (again). And rightfully so. Now it is the state of Nevada.

"The state of Nevada dramatically expanded its lawsuit against Bank of America today, turning the narrow case it filed late last year into a broadside that targets virtually all aspects of the bank's mortgage operations."

"Most broadly, Nevada's action signals that the banks' problems with home mortgages—the main cause of the financial crisis—continue to burden them and rattle investors. Bank of America, the nation's largest bank and company that services mortgages, has seen its stock plunge about 40 percent since March, in part because of its mortgage liabilities. Nevada's action won't help."

"By expanding the suit, Nevada's Catherine Cortez Masto joins New York Attorney General Eric Schneiderman in stepping up investigations of the bank. In addition to initiating a broad investigation of banks' securitization practices, he recently filed a suit charging that Bank of America had fraudulently foreclosed on homeowners."

"Nevada's newly expanded suit also undermines a previous settlement between Countrywide and numerous attorneys general. In 2008, as part of that settlement, Bank of America agreed to implement a mortgage modification program to address charges that Countrywide's marketing and lending practices had defrauded borrowers. That promised wave of modifications never came, however, so Nevada alleges Bank of America has breached the agreement. The expanded suit revives those allegations."

Bank of America and Donald Trump (and his son) deserve one another.

People who wonder what went wrong with this country need not look very far.

leonard cason September 2nd, 2011 | 1:50pm

banks rip people off royally with all the fees banks charge its no wonder people dont trust them ,hell they charge me and the customer that a check is written on a check , cashing fee so the bank punishes the check holder and the the person that cashes the check

HarryD September 2nd, 2011 | 6:41pm

leonard cason- and bottled water is fairly priced? Go to another bank...........

jebmeister September 3rd, 2011 | 5:39pm

Trump should get over himself and a) shave the orangutan off of his forehead and b) go ahead and buy the place. He's got the cash, the business prowess &c to turn it into something meaningful. This pettiness and ugliness is especially offensive in these trying times.

HarryD September 3rd, 2011 | 5:50pm

At least he has created 2 jobs at the winery- not been filled yet as the ads continue to appear....and they didn't cost teh Government $2MM each.

iwwhbwr September 4th, 2011 | 1:18pm

Deleted by moderator.

Possibly September 4th, 2011 | 2:53pm

iwwbwr: Get real. Albemarle is full of egotistical, self-serving, control-freak pigs. It's just the ones that have been here awhile have learned to be chameleons and look like they care. Your statement "this is what you get when you let someone like Donald Trump buy/enter Albemarle County" is a pretty egotistical statement in and of itself. Who has the right to stop him? What right does anyone in this county have to stop another from buying or coming here? Why are we so much better than anywhere else that our residents have the right to judge whether someone can be here? Loads of dirty deals went on here before Donald Trump ever thought of this place.

Bank Of America? These are the people who foreclosed on a residential property on which they held no mortgage, right? The same folks who have endeared themselves to so many attorneys general, "countrywide," if I may use that term. Ah, the sweet aroma of scorched earth! BoA has been here!

Not that Mr. Trump is timid when it comes to matter of getting his way. But at least he's one guy. So, I confess to some morbid pleasure at the idea of Trump trumping the big bank. But the bank? I'm not sure that even THEY know who they are.

Meanwhile, as the two circle each other like caged animals, let us hope that the properties and operations which Trump proposes to develop will, at least, provide some economic benefit to the area.

Tracy Carver September 5th, 2011 | 8:55am

B Of A foreclosed on a house on which they 'did not' hold the mortgage. In fact the house wasn't mortgaged at all. They didn't, wouldn't,couldn't verify any of the paperwork for the loan and foreclosed by false and forged documents. See the case in Florida. Also, B of A was bailed out by us the tax payers and since Mr Trump has beaten them at their own corrupt game I say they got what they deserve.

Old Timer September 5th, 2011 | 9:55am

Henry,

Banks shouldn't be lending money to people who can't pay it back either. For some reason though, this country always seems to think that only one side of the equation matters, that of the big business. Imagine all that taxpayer money they are sitting on and not lending now. BofA, along with many others deserve to be kicked down the street.

I think its a real hoot what The Donald is doing and I will enjoy watching him tweak BofA. Not as much fun as it was when the guy won a foreclosure against them for their erroneous foreclosure on him, but fun nevertheless. Hopefully he will do something productive with it, in the long run. He can't do much worse than Pattie. She had some good ideas but just had no clue on how to implement them I guess.

Old Timer September 5th, 2011 | 9:58am

Tracy,

What was even tastier - if we are talking the same case - is when the guy not only beat the bank back, he sued them for costs and won, and then got a foreclosure notice on them when they simply wouldn't pay. He had a bunch of moving trucks come up and some sheriffs with the order and they started removing furniture and take cash out of the drawers at the local branch. Suddenly the local manager found he could cut him a check.

Priceless.

Michael Prosser, the Great Communicator September 7th, 2011 | 10:56am

Turn it into an adult movie theater and I'll come, er, be there.

Kelly September 7th, 2011 | 11:35am

If you hate the larger banks and their fees remember your community banks! They are still out there and they believe in customer service and not killing you pocket book. Boycott the larger banks and start looking more into your community.

Mow September 7th, 2011 | 5:27pm

Deleted by moderator.

i wonder September 8th, 2011 | 6:47pm

does the first right of refusal follow the deed thru all owners to come forever more? why did it not die when the property was foreclosed on? foreclosures wipe out a lot of title issues.

Mow September 9th, 2011 | 8:45pm

What did I say? no curse words, no dirty jokes, no sexual innuendo, what ? you want me to start quoting the filthiest book in the world? The Bible.